Nearly everyone who thinks about death, who cares about how much of an inheritance he will leave to his survivors, and who
doesn't particularly want to make a lawyer wealthy, says to himself: "When I die, how can I keep probate costs to a minimum?
Or to ZERO!!" In many situations, the answer to that question has often been either (a) "Create a trust", or (b) "You can't".
Lawyers have been selling trusts for decades, and there are some good arguments for establishing a trust. However, trusts are
always complicated arrangements, and lawyers like to charge a lot of money for drafting trust documents. Recently in
Minnesota (in 2008) a law was enacted which made it extremely easy and inexpensive for anyone to totally avoid the probate
process without creating any complexity. If you live in a state other than Minnesota, you will perhaps be pleased to find that
your state has already enacted, or is about to enact, a similar law. If your state doesn't yet have such a law, you perhaps
should contact your legislative representative about proposing the change.
For many years, probably throughout the entire United States, it was legally permissible and simple for the owner of any
financial asset, such as a bank account, savings certificate, or stock brokerage account, to designate the account as being
owned by one particular person, but payable on death (POD) or transferable on death (TOD) to someone else. The "someone
else" would typically be the owner's spouse or children, but could be any beneficiary. By designating this asset as POD or TOD
(the abbreviation depending primarily upon the financial institution's terminology, but they both mean the same thing) when the
account was opened or anytime thereafter, the owner of the account could be assured that the account would pass directly to
the designee(s) without a probate proceeding, and without any probate expenses, after the owner's death. And to make it all
very attractive to the account owner, he could change the name of the POD/TOD beneficiary at any time without the consent or
approval of that beneficiary. Very slick indeed!
Until recently, at least in Minnesota, such an arrangement was legally impossible with real estate. If an owner of real estate
attached someone else's name to the ownership of real estate, that "someone else" would have an ownership interest in the
property and would be entitled to a share of the sale proceeds, and that "someone else's" signature and consent would be
needed in order to sell or refinance the property. Consequently, it was very risky, and perhaps downright foolish, for an owner
(which would include a husband and wife as co-owners) to place their children's names on the title to their home, or on any
other realty they owned.
The law in Minnesota, and perhaps in the state where you live, now allows an owner to sign and record a Transfer on Death
Deed, whereby the owner designates the person(s) who are to become the owners of the property after the owner's death, all
without a probate proceeding. Like the POD and TOD financial accounts, the owner can change this designation any time by
recording with the appropriate real estate records office the document which changes the beneficiary designation. This change
does not require any consent or approval of the beneficiary. Check it out. It's cool!
Douglas Turbak
Labels: Transfer Deed